By Shalimar Mulcahy, Senior Benefits Advisor
Benefits brokers play a key role guiding employers through the process of reviewing, comparing, understanding and managing health insurance policies that will attract and retain top talent. Brokers are typically compensated by insurance carriers, earning a commission based on premium or enrollment. However, as insurers struggle to recover from mounting financial losses brought on by the Affordable Care Act, they are dramatically cutting commissions on healthcare insurance. As a result, agents are being forced to negotiate with carriers and employers and presenting the option of fee basis, where they receive a flat rate per employee each month. Given that these fees and commissions eventually are passed on to businesses in the form of increasing premiums, the question employers should be asking is, “What am I getting for my money?”
Larger companies with more than 100 employees can look to their ERISA Form 5500 to see how much their benefits broker is being compensated, and weigh the value proposition for the services they receive. Many don’t take the time to review this information or ask their broker what services are included. Smaller employers frequently fail to evaluate their service package at all, because the fees are not disclosed unless they ask about them. Whether your business is about to renew its benefits package or you are looking for a broker to shepherd your organization through the process, you want to work with a trusted advisor who can meet your company’s specific needs. Here are several questions you should ask your benefits broker, to find the best fit for your business:
Can you advocate for my organization? Your broker should have the expertise and resources to find and negotiate the right coverages for your business at the best price. For example, a broker with on-staff underwriters is better equipped to challenge an insurer’s underwriting analysis to negotiate a better rate. Equally important, your broker should take the time to understand your company’s service philosophy and outlook for future growth, so they can be actively engaged in strategic planning to support your vision.
Do you offer the services I need? Having a broker who is knowledgeable about other coverages besides basic healthcare, such as dental, disability, life, or long-term care, and offers insights on current industry trends can help your business stay competitive and retain quality talent. Likewise, a trusted advisor that provides communication tools and educational resources to drive enrollment can lift the burden from your HR team. You should discuss in detail with your broker which services you need—and which you don’t—and review your service agreement annually to know what you’re getting for your money.
Can you keep us compliant? Your broker should have the resources and expertise to provide compliance advice on relevant state and federal laws, including the Affordable Care Act. Ask about the sources of information they use, and whether they will proactively work to inform and educate your company on pending legislative changes or new requirements that may affect your benefits programs. As everything is evolving in the healthcare arena, large employers should receive updates on a quarterly basis, and smaller employers at least twice a year, whether through direct communications or access to webinars and seminars that their broker provides.
Will you support our employees? Inevitably, issues will arise throughout the year, from a newly married employee changing their name to a worker in the midst of a claims battle with a hospital. You want to know from the outset how accessible your broker is, and whether they will be available to help your employees with individual problems, coordinating care, or assisting with claims resolution.
Can you explain my rate increases? When you’ve worked with the same benefits broker for several years, taking their word on a bump in premiums is the path of least resistance. But, a good broker will be able to provide a detailed analytical report for your renewal to justify any rate increase based on claims experience, as well as benchmarking reports to illustrate that the increase is in line with other businesses your size in the same industry and geographical area.
Do you have technology expertise? From online enrollment tools to mobile applications that let employees access benefits information at the touch of a button, your broker should offer technology solutions that support and enhance your benefits programs. If they don’t provide a platform as part of their services, they should be knowledgeable about what is available in the marketplace, and be able to recommend systems that are best-suited to your company.
To truly support your business, a benefits broker needs to wear a lot of hats. Although you may be working with one individual, you need the assurance that the team behind them is capable of delivering on multiple fronts, from research and advocacy to technology and underwriting expertise. More than looking for a broker with the lowest commission percentage rate, you should examine the services you’re receiving for that percentage, and select a firm whose offerings align with your business needs and goals. A talented benefits broker, who understands your business and offers resources and insights to give you an edge over the competition, can ease the administrative burden on your team and help to keep your employees and their families happy and healthy.